Trade unionists Gerardo Martínez, Pablo Moyano and Sergio Sasia joined Juan Grabois and other social leaders to launch the Comprehensive Development Plan
A project agreed by social organizations and unions to generate 4 million jobs with public funding reached President Alberto Fernández’s desk and takes its first steps as one of the dance alternatives for the post-pandemic economy. The initiative, ambitious in terms of the number of people it seeks to reach, gathers different views among economists. From refusals to try to create employment from the State instead of promoting investment, to criticism of pointing to the creation of low-productivity jobs to supportive glances for overcoming social plans in favor of a strategy based at work. The debate on the role of the State in the economy to come was rekindled, given the blow that activity suffered in the year of the pandemic and the jump in unemployment that the UCA now estimates at more than 15%.
The Excluded Workers Movement (MTE), led by Juan Grabois, presented this week in company with unionists such as Gerardo Martinez (UOCRA), Pablo Moyano (Truckers), Ricardo Pignanelli (SMATA), Sergio Sasia (Railway Union) and Juan Carlos Schmid (Dredging and Beaconing) its « Marshall plan » to generate employment from the hand of the State. With an initial annual investment of 750 billion pesos « We would create 170,000 registered jobs and 4 million social jobs, generating an impact of 865,000 million pesos from economic activity, which would result in higher tax collection », say the drivers.
Broadly speaking, the project proposes to use public funds to finance itself. In principle, based on the reallocation of part of the Income Tax to individuals and, in addition, through a savings fund in pesos in which workers reached by this tax can place part of what they pay for the same concept as a form to incentivize savings. In this way, they point out, they intend to promote work in the construction sector and other low-skilled sectors, which is where they maintain that there are greater needs for labor insertion.
The fiscal deficit until June is 7.5% of GDP. If we add the prorated spending of this plan (375,000 million) the deficit already goes to 10% of GDP (9.7%). In a country that does not have financing, that is tempting a major crisis (Carrino)
For the economist and head of C&T Economic Advisors, Camilo Tiscornia, the project is interesting because it focuses on an employment problem that exists and needs to be addressed. But, beyond the initiative, the conception of the program has several points of opinion, such as the sources of financing, the need to avoid corruption and the problem of saving to transform into investment, which goes beyond a program.
« It seems to me an interesting initiative because it worries about a segment that finds it difficult to insert into the formal circuit of the economy and that understands that the solution is work, because receiving social assistance does not help human dignity and it has unfortunate consequences. In fact, that idea of consolidating different grants into a work program seems like a good idea to me, ”said Tiscornia.
« Now, an investment of about 1.1% of GDP is necessary, which is not a small amount because precisely the fiscal front is very complicated by the problem of greater social assistance that was necessary due to the pandemic and the fall in the collection. It would be interesting if spending came out of budget reforms so that the resources that the State is using today in a less efficient way than this project. If the projects pass a reasonableness evaluation, which is another point, it should be the State that reorganizes itself so that there is no more fiscal deficit, « he said.
« Then, another very important point is that they talk about control bodies, steps that have to be done for the works, an entire organizational structure that has to be free of corruption, something that Argentina is not very good at, because this unfortunately it is a breeding ground for corruption, « added Tiscornia.
« Another point is saving, which as an idea is great, but you go into a more general concept. To solve this, what they are saying in the background is that investment is needed. It does not escape the macro predictability necessary to encourage investment. A fund in pesos if you do not give very clear signals regarding inflation or respect for private property, you do not generate the confidence for someone to invest. Let’s imagine that this fund takes on volume, ends up being highly valued by politicians of all signs who tend to appropriate it ”, concluded the C&T economist.
Another point is saving, which as an idea is great, but you go into a more general concept. To solve this, what they are saying in the background is that investment is needed. It does not escape the macro predictability necessary to encourage investment (Tiscornia)
For the economist Ivan carrinoInstead, the project is directly unviable from a fiscal point of view. « The fiscal deficit until June is 7.5% of GDP. If we add the prorated spending of this plan (375,000 million) the deficit already goes to 10% of GDP (9.7%). In a country that has no financing, that is tempting a major crisis tax or aggravate the one that already exists. In other words, high rates of country risk and inflation and devaluation, ”he said.
“The second is that he intends to finance this with more taxes. So there you have two problems. The first is that there is no economic reactivation if you take out some to give to others. You will have more spending on these new employees, but less spending, savings (which is credit) and reinvestment of parts of the companies and people to whom you increase taxes. The account ends up giving you zero ”, he argued.
“And finally, the issue of creating work in whatever it is does not make economic sense. Work is created as companies or entrepreneurs detect business opportunities. That is to say, unmet needs of potential clients. That adds economic value, which is what generates true wealth and as a by-product generates sustainable jobs over time and productive in the economic sense of the word. Creating work for the mere fact of doing it is a waste of resources that are scarce and that will produce things chosen by politicians and not by people in a market. That generates inefficiency and in the long run poverty and crisis”He added.
Trade unionists and leaders of social movements formed an unprecedented alliance to generate employment
The Economist Agustín D’Atellis participated in the preparation of the project, in his work with one of the participating unions, Unión Ferroviara. More specifically, his work focused on the savings mechanism based on an income tax exemption and he defends the project.
« The plan is a broad and comprehensive contribution at a time like this in which Argentina needs to get out of a crisis situation that caught us at a bad time, a consequence of the last 4 years of Macri’s economic policy, in which no To be able to access the credit market, you have to resort to monetary issuance, and so on. All of that pushes you to be creative, ”he said.
« This initiative aims at structural issues such as population distribution, cutting this concentration in large cities that generate many problems for you. They also have to do with boosting the economy, that is why it includes construction, which is a great generator of direct and indirect employment and which has the virtue of not pushing you towards external restriction because the inputs you use are of national production. Part of the government’s strategy is to exit through public and private works, ”said D’Atellis.
Where you have problems, as always, is on the issue of financing. The idea is that part of the Income Tax for workers, the fourth category, be recognized in a fund that invests in the real economy and thereby generates a stimulus to savings (D’Atellis)
« Where you have problems, as always, is on the issue of financing. The idea is that part of the Income Tax for workers, the fourth category, be recognized in a fund that invests in the real economy and that thereby generates a stimulus to savings, part of the tax on those workers who decide to save in this fund and that through this saving that the Government recognizes part of what it takes for Earnings”, Said the economist with good arrival to the Government, who claims to have sent the project to President Fernández.
« You have a stimulus to saving, you stimulate, you help a cultural break with respect to the dollar as the only alternative and the workers recover part of the Income Tax, which is one of the old claims of the sector, » he concluded.
For Rodrigo Alvarez, from Analytica, what the plan is virtuous on a symbolic level it loses from the financial and fiscal points of view.
« The plan points in the right direction from the symbolic, which is the generation of employment in the most vulnerable sectors, those most affected by the recession. It even seems necessary looking at governance and the reconstruction of an image worn by the last few months of isolation, ”he said.
“From a financial point of view, it is no longer so clear there. What is new is that political actors recognize the lack of availability of resources. In that sense, a part of the program would be financed with current programs, with items that already exist and are not transitory (as the IFE and ATP are) and if it is implemented in a sophisticated way, the recovery rate can be high. ”Added Álvarez.
« But the other half it has a high budgetary impact (1.1% of GDP). Although we still do not know the draft budget for 2021, we do know that we are starting from 8% of GDP in the primary deficit and that we have a debt pending to be renegotiated with the IMF. The implementation of new taxes, or the impact of current taxes, is also difficult in a recessive context. We also know that the recovery of economic activity will be very graduall. It is clear that the fiscal impulse is always faster and more effective and that construction is the sector with the highest multiplier effect, we see the answer more from that side ”, he concluded.
The Economist Agustin Etchebarne, from Libertad y Progreso, focuses on the works that the program seeks to promote, which, in its opinion, are the wrong ones.
Non-productive work impoverishes Argentina, the way to create productive work is the opposite of public spending, is to lower taxes and deregulate employment. There you will have a jump in job creation very quickly and do the opposite of the Telework Law
“Low productivity work, to absorb a lot of jobs, is very bad for the economy. The anecdote of Milton Friedman in China is very good, who sees people working with picks and shovels, asks why not machines and they answer that because shovels generate more jobs, « said Etchbarne. « Friedman, with his usual irony, then asked them why they weren’t using spoons. »
« Non-productive work impoverishes Argentina, the way to create productive work is the opposite of public spending, is to lower taxes and deregulate employment. There you will have a jump in job creation very quickly and do the opposite of the Telework Law. Employment is being generated massively around the world in communications, the Internet, Amazon-type sales or free market, and everything that is entertainment. Also what is services. And if you want to decentralize, you promote teleworking, you don’t make it difficult ”, he commented.
« I think it is a serious mistake to generate employment with social leaders, because it does not generate productive employment, the name of the task is to generate productive work, » he concluded.
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